Article published in
Institute of Directors
'Growing Business' Handbook

Regarding purchasing
business travel

How should you manage your business travel to ensure you achieve value for money and prevent the budget running out of control? Norman Gage of Advantage Business Travel explains how a travel policy and a travel management company would help.

Virtually all businesses require travel. Whether you are servicing existing customers, sourcing materials and products, or searching for new customers, your executives will be travelling around the country and probably overseas in order to run your business. But how should this be managed? Who should make the travel arrangements? How do you keep costs within budget and ensure value for money?

Your team is good at what your company does - making widgets, building nuclear power stations or running call centres - but not necessarily buying business travel. You already buy the professional services of accountants and lawyers, so why not business travel as well?

Here, we take a critical look at your business travel arrangements to ensure you get value for money, ask if you should outsource your arrangements and if so, how to do so.

Booking Business Travel
Your business travel needs might include monthly client meetings around the UK, quarterly meetings with a European affiliate, trips to Asia to source products and forays to emerging markets in search of new customers. Even in a company with relatively few executives - and fewer travellers - travel requirements can soon become a burden on whoever is tasked with booking them. Travelling will be a prerequisite for a company looking to grow its client base, spread its risk or introduce new products. But there comes a point when the managing director's PA is no longer the right person to handle it. They have more pressing tasks than trying to understand the complicated pricing structure for UK rail services or the routing possibilities for flying London to Jakarta, via Tokyo. This is the time to consider outsourcing your business travel.

Why Outsource?
A specialist travel management company (TMC) has all the expertise you need, and more, to ensure arrangements are made correctly to save you time and money. Airfares are probably where a TMC demonstrates best value as they have access to fares simply not generally available. Likewise, as large bookers of hotel rooms they negotiate rates around the world that only the biggest corporates would otherwise enjoy. Anyone who has tried booking rail tickets will appreciate handing the task over to somebody else! Independent TMCs who are part of a large consortium will have access to these highly competitive airfares and hotel rates.

Working with a TMC also means a higher level of service: they understand that executives have to be flexible in case the meeting runs late and will book the appropriate tickets; you will have a central point of contact with someone who understands your business; most TMCs have an out-of-hours service so, when an employee misses their plane on the other side of the world someone is there to help.

Finding a TMC
Selecting the right TMC for you is an important task but there are guidelines.

Firstly, understand how they charge. Some claim to offer 'no fees', but will add a hidden charge to their fares. A TMC will charge a transaction fee commensurate with the level of work involved. Do not ignore a TMC who charges by transaction fees, it may be worth paying the extra 10 per booking if the fares are on average 25 cheaper.

Secondly, size matters. Whilst bigger TMCs may charge less, be sure their service matches your expectations. The largest TMCs have the largest accounts, so can't offer the same service to their global customers as to smaller corporates. There's a plethora of independent TMCs in the UK, who provide the service levels you would expect from an independent, but who have the buying power of a network behind them, giving them access to the best fares in the market.

Some TMCs have knowledge in a particular sector, perhaps pharmaceuticals, so you could choose one that has expertise in your field. Alternatively, you might prefer a local company so you can have some face-to-face contact. However, if you have significant overseas requirements, perhaps you are opening an office in Sydney or Milan, check they have the international contacts to service you effectively; for instance ask if they are members of an international network.

To choose the right TMC for you, draw up a tender document outlining your travel requirements and budget, and ask a few companies to pitch. Identify your potential travel spend, typical destinations and frequency; include whether you need management information (MI) data; and if you require self-booking tools in your office to book simple travel arrangements yourself. Once you are in more detailed discussions, talk about service level agreements so each party knows what is required and agrees to deliver. However, don't waste time asking for information that is unlikely to be utilised, as the cost will reflect everything you have asked for.

Implementing a Travel Policy
One key area to agree with a TMC is the travel policy. We've all worked for organisations where the managing director flies business class and colleagues must fly economy. Although we might not disagree with the principal of senior managers travelling in more comfort, it is perhaps the unwritten rule or unfair enforcement of rules that people dislike. A travel policy obviates these problems, ensuring detailed regulations are put in place, fully understood and rigorously enforced. The policy ensures fairness but also value for money and considers employee effectiveness.

A TMC will help draft a clear travel policy taking into account relevant factors, including:
Which executives are permitted to travel first or business class rather than economy or standard
Who is permitted to stay in which star rating of hotel
When someone should travel the night before rather than the day of the meeting
How travel requests are authorised, who is permitted to agree non-compliance with the policy
How your travel needs may change, if your company is set to grow outside Europe for the first time, the policy needs to cover long haul travel and longer periods away
Who an executive should contact to book travel and who is authorised to sign off on travel arrangements

As experts in resolving these issues and others, involving a TMC in the beginning will ensure the policy has clarity and is robust.

When it comes to implementation, a travel policy should also state preferred suppliers such as which airline or hotel group should be considered first. The price a corporate traveller pays is determined by the supplier's willingness to negotiate, which is based on the company's ability to deliver business. This can be dictated by the company's travel policy and its enforcement.

Key to implementation is compliance with the policy. If it states that all flights from London to the USA should be with a specified carrier but the MI shows several trips planned on other airlines, it is important to understand why. It could be due to fares, schedules, traveller requests or frequent flyer programmes. MI will be an integral part of the process in a new policy both prior to implementation and ongoing to allow all parties to make decisions and monitor progress.

If all this sounds a bit daunting remember the TMC is largely in charge of implementing the policy; will help communicate it to executives; all travel requests will be actioned by the TMC who will ensure adherence. One of the key benefits of having a policy is to save you money, by negotiating better rates with suppliers and by preventing an extravagant employee unnecessarily booking first-class flights and five-star hotels.

If your time is better spent growing your business, and if that growth involves more travel, now is the time to outsource your business travel, standardise your travel purchasing by implementing a travel policy and choose a TMC to help save you time and money.

Endnotes:
Norman Gage is Director of Business Travel at Advantage Business Travel, a network of over 200 independent travel management companies around the UK.

As a consortium, Advantage Business Travel members have access to some of the best airfares and hotel rates in the market, and are part of the Worldwide Independent Travel Network with affiliates in 12 countries around the world.